Coronavirus: The Caribbean is the First Domino to Fall, but There is Hope

Published on Friday April 24, 2020 at 11:14 a.m. Atlantic Standard Time (GMT-4)

The views, thoughts, and opinions expressed in this letter belong solely to the author, and not to One News SVG.

By David Gumbs, James Fletcher & Justin Locke

The global economy is on lockdown and the predictions are staggering. And, there is one regional economy where the long-term realities of the coronavirus are already clear: The Caribbean. 

Over the past three decades, nearly every economy in the region transformed to depend on tourism, and today the Caribbean economy is primarily reliant on this single sector. The region is also subject to repeated crises, with 10 Category 5 hurricanes hitting the region in the last 15 years, and five of those occurring in the last three years. 

The coronavirus has caused a complete collapse in the tourism industry and significant contractions in both the agricultural and the distributive trades sectors across the Caribbean. As a result, the region’s economy is collapsing and will likely not recover for some time.

Because of the Caribbean’s focus on a single, volatile sector, it is likely to be the first domino to fall in the post-COVID-19 world. When this is all over, the region cannot go back to business as usual. The Caribbean will have to fast-track its journey toward the twin goals that many of its countries embarked on as a result of the impacts of climate change as well as frequent natural disasters: sustainability and resilience.

As such, any multilateral stimulus should be designed to help the Caribbean transition to a new resilient economy that is anchored in sustainable development. The foundation of the future is clean energy, and on top of this, new diverse industries such as modern agriculture, information technology, financial services, and manufacturing can be built. And there is a clear pathway.

Rocky Mountain Institute commissioned a study to understand the costs and benefits to transition all 31 countries in the Caribbean to 90 percent clean energy by 2030. If a major capital investment is made, the Caribbean region would save an estimated $9 billion in fuel costs and replace more than 24 billion liters of imported diesel fuel with renewable energy each year. This would translate into valuable savings in foreign exchange for all countries in the region.

It is no secret that Caribbean governments face significant fiscal constraints, and with the impact of COVID-19 that these constraints will become increasingly insurmountable. It only makes sense that the international community and philanthropic sector use this opportunity to inject global public investment initiatives to accelerate project development in the clean energy sector at a pace and scale never seen before. Economic stimulus investments into the clean energy sector therefore present Caribbean countries with an opportunity to:

  • Create urgently required new jobs,
  • Reduce electricity costs to attract new industries,
  • Improve the competitiveness of agro-processing and other manufacturing sectors,
  • Shrink the region’s carbon footprint,
  • Decrease leakage of foreign exchange, and
  • Diminish dependence on imported fuels.

In order to achieve this, the international community and philanthropy must support Caribbean governments to:

  • Focus on re-tooling workers to give them skills needed in the clean energy sector, modern agriculture, manufacturing, and information technology;
  • Boost incentives for electric vehicles (EVs) and design policy measures to unlock EV supply chains as well as investment in EV charging infrastructure;
  • Forgive overdue electricity bill payments for the poor and local businesses affected by the shutdown;
  • Backstop electric utility credit and access to low-interest credit while providing liquidity to government-owned utilities to shore up their finances;
  • Create clean energy lines of credit designed to backstop power purchase agreements and capital leases to crowd-in investment in renewable generation; and
  • Put people to work immediately in the construction sector by undergrounding overhead transmission lines so that they will not be knocked down by the next storm.

Collectively, these actions will help create thousands of jobs, reduce regional emissions, and reduce long-term dependence on imported diesel, helping the Caribbean to create a new foundation for a diverse, resilient, and sustainable economy. This may be a once in a lifetime opportunity to demonstrate a new vision for the region’s climate future and become an example for the world—transforming its citizens into controllers of their destiny and leaders of the clean energy era.

The Caribbean may be the first economic domino to fall from the coronavirus pandemic. It can also emerge once the crisis is over with a more resilient future through smart utilization of stimulus funding to unlock rapid, intensified investments to help these important islands on the frontlines of climate change make a full transition to become clean energy economies.

About the authors

David Gumbs is the former Chief Executive Officer of the Anguilla Electricity Company, Ltd (ANGLEC). David led the historic Hurricane Irma recovery efforts restoring the grid to 100 percent in 100 days. Hurricane Irma devastated the island—destroying over 60 percent of its infrastructure. Under David’s leadership and in collaboration with colleagues throughout the region and various partners, including CARILEC, the UK Government, and the Government of Anguilla, the island’s grid was restored in record time—earning him much recognition.

James Fletcher is a former Minister for Public Service, Information, Broadcasting, Sustainable Development, Energy, Science, and Technology in Saint Lucia. He served in that position from December 2011 to June 2016. During his tenure, James led Saint Lucia on an aggressive path toward the modernization of the energy sector with a strong push toward the use of renewable energy. He has been very active in international climate change negotiations. He played a leading role in the Caribbean’s “1.5 to Stay Alive” climate change campaign. During the COP21 negotiations on the Paris Agreement in 2015, he was a member of a small group of 14 ministers from various countries around the world who were selected to assist the COP President in achieving consensus on the more contentious elements of the agreement.

Justin Locke is a Senior Director at Rocky Mountain Institute (RMI). He co-leads RMI’s Empowering Clean Economies Program and is the senior lead for the Islands Energy Program (https://rmi.org/our-work/global-energy-transitions/islands-energy-program/). Justin also is responsible for international strategic partnerships and resource mobilization with the multi-lateral and bilateral community at RMI. Justin previously held the position of Infrastructure (Disaster Risk Management) Specialist at the World Bank where he managed the Caribbean adaptation and infrastructure portfolio.

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